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Is it better tax-wise to have all bills included in the rent or bills in the names of the tenants?

Hi all.
Hope this is in the right part of the forum. I have a house with 4 bedrooms which I rent out to 4 separate tenants.  To date I have been charging a monthly rent that reflects the fact that all the bills are in my name.  
Last year my income tax bill tripled and I believe this is because HMRC's rules now result in tax being charged on turnover not profits? 
So my question: from a tax point of view, am I better off putting the bills in the names of the tenants (and adjusting the rent downwards to take account of that)?

Any thoughts / advice gratefully received. 

Comments

  • QrizB
    QrizB Posts: 18,713 Forumite
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    Any thoughts / advice gratefully received. 
    You need a better accountant.
    N. Hampshire, he/him. Octopus Intelligent Go elec & Tracker gas / Vodafone BB / iD mobile. Ripple Kirk Hill member.
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  • MyRealNameToo
    MyRealNameToo Posts: 1,093 Forumite
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    No, they are still taxed on profit but what's allowable expenses are changed periodically, like when they removed the ability to claim the interest on mortgages as an expense. 

    How are you running your inclusive rate? Is it just a fixed uplift and you hope someone doesnt have electric heating running 24/7? Or are you passing through the actual billed amount so their rent changes all the time? 
  • ripofflondon
    ripofflondon Posts: 142 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    Hi all
    Thanks for responses to date.  Yes I need to ask the accountant for tax advice as distinct from using them to do my tax return based on things as they are currently arranged.  

    How running the rate?  It's a fixed uplift and to date the tenants have been very good about not taking the P. 
  • sheramber
    sheramber Posts: 22,854 Forumite
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    Hi all.
    Hope this is in the right part of the forum. I have a house with 4 bedrooms which I rent out to 4 separate tenants.  To date I have been charging a monthly rent that reflects the fact that all the bills are in my name.  
    Last year my income tax bill tripled and I believe this is because HMRC's rules now result in tax being charged on turnover not profits? 
    So my question: from a tax point of view, am I better off putting the bills in the names of the tenants (and adjusting the rent downwards to take account of that)?

    Any thoughts / advice gratefully received. 
    and I believe this is because HMRC's rules now result in tax being charged on turnover not profits? 

    Since when?
  • ripofflondon
    ripofflondon Posts: 142 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    sheramber said:
    and I believe this is because HMRC's rules now result in tax being charged on turnover not profits? 
    Since when?
    If I am wrong then I stand corrected, but my 23/24 tax bill tripled over the 22/23 one even though nothing else had changed - I have been running the same 'all-bills-included' model since I acquired the place in 2013.  
  • sheramber
    sheramber Posts: 22,854 Forumite
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    You can claim allowable expenses or the property allowance if you£1000, but not both. 

    If your expenses are more than £1000 then you claim the expenses amount. 

    Finance costs are restricted to  relief at 20%. 

    Do you fill in your own return or do you have an accountant? 
  • silvercar
    silvercar Posts: 49,721 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    sheramber said:
    and I believe this is because HMRC's rules now result in tax being charged on turnover not profits? 
    Since when?
    If I am wrong then I stand corrected, but my 23/24 tax bill tripled over the 22/23 one even though nothing else had changed - I have been running the same 'all-bills-included' model since I acquired the place in 2013.  
    You deduct the bills as expenses. You need to consider your profit margins, given that utility bills have increased massively since 2013. My water bill alone increased 40% this year. 
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • ReadySteadyPop
    ReadySteadyPop Posts: 1,785 Forumite
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    sheramber said:
    and I believe this is because HMRC's rules now result in tax being charged on turnover not profits? 
    Since when?
    If I am wrong then I stand corrected, but my 23/24 tax bill tripled over the 22/23 one even though nothing else had changed - I have been running the same 'all-bills-included' model since I acquired the place in 2013.  
    What did HMRC say when you queried it?
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